ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If you’re already close to maxing out your credit cards, your credit score could jump 10 points or more when you pay off credit card balances completely. If you haven’t used most of your available credit, you might only gain a few points when you pay off credit card debt. Yes, even if you pay off the cards entirely.

Detailed explanation-2: -While paying off your debts often helps improve your credit scores, this isn’t always the case. It’s possible that you could see your credit scores drop after fulfilling your payment obligations on a loan or credit card debt.

Detailed explanation-3: -Credit Institutions generally submit data to CIBIL within a span of 30-45 days and if you happen to purchase your CIBIL Report-within 45 days of your last payment of dues, it may not be updated. This leads to reflection of inaccurate current balance or amount overdue in your CIBIL Report.

Detailed explanation-4: -However, it is good practice to pay more than the minimum payment, especially when you’re in debt. The reason is that paying more than the minimum payment means you clear your debt faster. Exceeding the minimum payment will also mean you less overall interest and boost your credit score.